ISLAMABAD: The Central Development Working Party (CDWP) on Thursday cleared a total of three development projects with a cumulative estimated cost of about Rs280 billion, including the Karachi Circular Railway (KCR).

The meeting presided over by Deputy Chairman Planning Commission Dr Jahanzeb Khan finalised at Rs273.071bn the cost of KCR as a modern urban railway project and requested the Executive Committee of the National Economic Council (Ecnec) to approve its implementation in the Public-Private Partnership (PPP) mode on a build-operate-transfer basis.

A meeting of the board of Public-Private Partnership Authority (P3A) presided over by Planning Minister Asad Umar on Jan 25 had asked the Railways Division and the Planning Commission to finalise the cost estimates and submit them to the CDWP for scrutiny and subsequent approval by the Ecnec.

The CDWP also approved Gujranwala Institute of Nuclear Medicine and Radiotherapy (Phase-II) with a revised cost of Rs3.280bn and a project of Social Health Protection Initiatives of the Khyber Pakhtunkhwa government at a cost of Rs3.366bn.

An official statement said the 43-km dual track of the Urban Rail Mass Transit System will be constructed in a period of three years on a PPP basis. The main objective of the project is to provide reliable, safe and eco-friendly public transport to the metropolitan city of Karachi.

The project is expected to serve a daily ridership of 457,000 which is expected to increase to one million a day by the end of the 33-year concession period. It will deploy the use of electric trains and will be operational round the week. The project involves 30 stations along the corridor covering the most densely populated areas of Karachi.

As per the route alignment, KCR commences from the existing Karachi city station, moves along the mainline of PR on Drigh Road Station. It further goes across Shahrah-e-Faisal and enters into Gulistan-e-Johar, and Gulshan-e-Iqbal. After passing through the older residential areas of North Nazimabad, Nazimabad leads to the SITE area and further to the Port, then reaches back to Karachi City Station.

Under the transaction structure approved by the board of P3A, the private sector will finance, develop and run the project on commercial lines. The transaction structure proposed by the consultants/transaction advisers envisaged about Rs533bn government subsidy over the 33-year project life for electricity and major operation and maintenance costs which were rejected by the board. The project cost was initially estimated at about Rs201bn but has gone up because of delays and viability gap financing.

The federal government would finance 40pc of the revised cost of the project that would work out at about Rs80-90bn and provide this financing to the concessionaire at the outset (first three years) to help operationalise the project.

On the issue of 40pc (Rs80-90bn) government cost-sharing, the P3A board decided that the railway board would be asked to lease out for 99 years 13 properties en route the KCR project to meet the initial financing since the profit would ultimately flow to Pakistan Railways. Alternatively, in case of the railway board’s disagreement, the federal government would provide the funding out of Public Sector Development Programme but then the return on that funding would be directed to the federal government instead of Railways.